Negative Effects of NREGA
The system does have its share of flaws. Three related problems have contributed to this state of affairs: confusion about the operational requirements of the Act; absence of any grievance redress address? system; and lack of independent monitoring. The combination of a Central Act with the state-specific schemes calls for rigorous coordination between the Centre and State Governments, but this is not happening; the Union Ministry of Rural Department does not even have a copy of each of the State schemes. The Central Employment Guarantee Council, an independent monitoring body for the NREGA is virtually non-functional. In Gujarat, while the administration in Panchmahals and Dahod claims that social audit has been conducted, actually no report is available for scrutiny. NREGA workers are largely non-literate, and hence don’t have formal literacy skilsl to record their rights or to articulate their demands in a written form. The provision of unemployment allowances implying a guarantee has not been paid implemented ever in most of the states. Workers of NREGA have attempted unionization for timely payment of legally due wages. NREGA-I experimented with wage payments through banks which failed, because there are no banks in most of the rural areas where the act is operating. Another problem is payment of wages at or above market rates. This could mean job diversion from more productive to less productive uses. For instance, estate owners in Kerala find it difficult to get labourers to work for them, as they prefer to work under NREGA making same money for less work. Even though the Act promises equal benefits to women, loopholes have emerged here too. Women in Sitapur (Uttar Pradesh) reported that they were turned away to make way for men. Another hurdle is the lack of childcare facilities. Even though the Act bans contractors at NREGA worksites they still have an illegal presence. Tapas Soren, a tribal of Birakhap in Jharkhand, committed self-immolation, impoverished by the constant demand for bribes by local officials for work done under the NREGA. His death soon after the murder of Lalit Mehta who had exposed corruption in NREGA schemes in Palamu is a damning comment on how the scheme is being implemented in Jharkhand.
must occupy key positions at every level. Government should consider recognising a one-year diploma course on NREGA, where institutions like CAPART (Council for Advancement of People’s Action and Rural Technology) can play a significant role. To accommodate ground-level variations, there is an urgent need to put a proper IT infrastructure in place and customize software in estimation processes. Routing NREGA via UID will enhance its operational efficiency. Workers’ organizations could also add new dimensions to the entire programme, with the potential to make a wider impact on workers’ perceptions of what is due to them at the workplace. A National Authority for NREGS (NAN) could be set up as an autonomous body having four departments- evaluation and social audit, grievance redress, IT and Human Resource Development. NREGA in its true sense works towards empowering the current generation of rural India so that the coming generation does not need to depend solely on it. Thus, NREGA can be a self liquidating programme. So, at least for the next ten years this model needs to be sustainable. The obsession with economic thinking is to reduce fiscal deficit at all costs. What this line of thinking fails to recognise are the dynamic growth-enhancing dimensions of national investments that in a country like India, only the government can make. An Employment Guarantee focused on these factors can fuel growth that would in turn help lower the fiscal deficit; for as incomes rise, so would the government revenues. So it should not be considered as expenditure but as a sound investment. By fuelling successive rounds of private investments, it will serve as a multiplier of secondary employment opportunities. To conclude, if the weaknesses in NREGA’s implementation are addressed, it can serve as a beacon of light for other rural development p rogrammes and also have second and third round effects that will go well beyond the policy maker’s design. The act gives rural India employment as a matter of right, and claiming this right is within the realm of possibility.
Pranay Veer B Class of 2013 PGDM, NMiMS Hyderabad
ECONOMICS
THE RUPEE MATTERS...!!!
I
ndia is the world’s 4th largest economy in terms of GDP PPP (Purchasing Power Parity) with $4.19 trillion according to the World Bank and 9th in the world GDP nominal terms with $1.72 trillion. It’s the 2nd fastest growing major economy with an impressive average annual GDP growth rate which stood at 6.6% in 1990-2010. Since then the economy has gone through different stages of development with a motive to become a “Developed economy”. These are the trends of India’s Imports and Exports:
on several countries to meet the needs of different commodities like Crude oil, Precious metals, Capital goods like Machinery and Equipment. It depends on other countries for Capital goods because India spends only a marginal amount (0.6% of GDP) on Research and Development. Factors which affect the valuation of rupee and its impact on exports & imports: Stock Market Investments: India is a major hub for foreign investment. India’s largest FII is Mauritius whose GDP is just $9.7 billion. This is because India’s has DTAA (Double taxation avoidance agreement). If Mauritius wants to invest in India, it has to choose a common currency which is liquid other than its domestic currency. Globally, the most preferred currency is US Dollar. When FDI’s and FII’s increase there presence in India, there will be a rise in the value INR due to the increase in demand of Rupee and its value will appreciate against USD. Then it may rise from $1=45 to $1= Rs 43 (just for an explanation). “Then undoubtedly, our import bill will be cheaper to pay, but one the other hand, payments we receive from Exports will also fetch few rupees per dollar. “ However, when they divest, the USD will appreciate as there will be a rise in the Demand for USD. As Foreign investors will sell off their investments when the stock markets fetch good profits to them. Hence, there will be a fall in the demand of INR. Then it may rise from $1 = Rs.45 to $1= Rs.47 (Hypothetical figures). “Then our export bill will be costlier to pay, but the payments we get from Imports will be high”. Here, IT sector which depends most of its revenue from
iNM VOLUME 1, October 2011 35 NMIMS Hyderabad
EXPORTS Trade Trade Balance $250.5 billion (2010-11) 130.5 ($ Billion)
IMPORTS $380.9 billion (2010-11)
Petroleum products, precious stones, machinery, iron and steel, chemicals, vehicles, apparel Major Trade Partners • • • • • • • UAE US China Saudi Arabia Australia Germany Singapore
Crude oil, precious stones, machinery, fertilizer, iron and steel, chemicals
The Road Ahead for NREGA
For the potential of NREGA to be realized major reforms need to be implemented. Firstly, remove the upper limit on the number of guaranteed employment days under the act (100 days per annum) and secondly, turn it into an individual entitlement (and not a household one). Also full time professionals
34
iNM VOLUME 1, October 2011 NMIMS Hyderabad
The above mentioned table states that India has more Imports than Exports which tends it to pay more than what it gets in foreign transactions. It has a deficit in the Balance of Payments. Therefore, the Rupee valuation matters a lot. India depends